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Plea for co-operation or money will go up in smoke

by 5m Editor
16 January 2003, at 12:00am

UK - A black cloud has descended on NPA following the news that pig producers are in the process of throwing away 3150,000.

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"Our willingness to scrap and whinge rather than to cooperate means we are willfully waving goodbye to hard-won cash," said one senior figure today.

The pig sector climate control levy scheme is in turmoil because its members are failing to work together. The situation can only be redeemed if members have a last minute change of heart and choose not to "ring fence" their energy savings.

In return for giving members an 80 percent discount on climate control tax, government expected to see a four percent reduction in energy use by autumn last year.

The pig sector scraped through by the skin of its teeth but the margin of success is so slender that if anyone chooses to "ring fence" his or her savings rather than leave them in the general pot, the scheme as a whole will fail.

A plea by NPA climate control group chairman Hugh Crabtree not to ring fence appears to have fallen on deaf ears: to date over 80 members have indicated an interest in protecting their surplus by ring fencing.

"Unless they have a change of heart the pig sector climate control levy scheme will inevitably fail and that means that as an industry we will be throwing away 3150,000 each year in climate control levy discount.

"Producers recently won 3320,000 of their own promotion levy money back for supply chain initiatives and at the same time they are throwing away nearly half that amount in tax rebates. It doesn't make a lot of sense."

Failure to reach the four percent target will mean that those who have individually hit target can keep their discount and stay in the scheme whilst those who have not hit target will either have to quit it, or buy carbon to stay in.

"The only reason for ring fencing is if a producer judges he will not make his target in future. Looking at the figures and from our knowledge in general it is pretty clear that there is still plenty of scope for energy use reduction - so the risk of not making the targets going forward is small," said Hugh Crabtree.

"Ring fencing means more time on form filling for only potential advantage in the future whilst not ring fencing means we could all just get on with reducing costs further by reducing energy use per unit of output."

Writing on the NPA Forum page today, James Black, NPA's champion on environmental issues, says: "We appeared to have just scraped through if nobody were to ring fence their excess achievement… but such is the lack of cooperation and understanding within out industry, what we now get is a whinging and scrapping, resulting in the potential to wave goodbye to a hard won bonus for the pig sector. Is it any wonder that those few who fight for the industry become disenchanted?"

Most pig producers pay the full climate control tax on their energy bills, whereas the 577 members of the pig sector climate control scheme have received an 80 percent discount.

Of these 577, about half have achieved the four percent reduction. Further reductions are required going forward over the next ten years, to reach a total of 16 percent.

"If members had been prepared to show a degree of altruism the whole scheme could have gone forward with the discount available to everyone," said Hugh Crabtree.

As it is, around half the members will lose the discount, and this is worth around 3150,000.

Whilst this is a disappointing outcome and reflects poorly on the industry's ability to work cooperatively, all producers should be aware that the real prize is not so much the levy discount, but the potential to make real and meaningful savings in energy use.

"At Farmex we daily see examples of producers who are profligate with energy. Survival means being good at what we do, and being good means saving costs by cutting out waste," said Hugh Crabtree.

Producers who are interested in cutting energy wastage should visit the NPA's climate control site for advice on how to make savings. This site will be maintained despite the chaos now surrounding the pig sector Climate Control scheme.

Speaking at NPA Producer Group this week, East Anglia producer Philip Richardson said that if the 85 producers who had expressed an interest in ring fencing chose to go ahead and do it, they would be "letting down the rest of us who have decided not to ring fence for the good of the scheme as a whole."

Hugh Crabtree feared that if the scheme failed to reach its target as a result of ring fencing those who had failed to reach the four percent target would simply walk away. "And then will the scheme be viable?"

Jim Dewhirst wondered how easy it would be to convince a member who had made a considerable investment in energy saving not to ring fence.

"If someone has made big savings then that is the main prize… not the levy discount," said Hugh Crabtree.

"The only reason for ring fencing is if you fear you are going to increase energy use in future years, but we are quite clear there is considerable scope for all producers to cut their energy bills going forward, so there is no need to ring fence."

He told Producer Group he was sure most producers had done "very little" to cut energy costs.

"There will be many people who have achieved their first milepost passively. I'm here to tell you most people have done bugger all about cutting energy costs."

Source: National Pig Association - 16th January 2003

5m Editor